May
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Earnings season is back in full throttle. We also bring you news of Egypt’s plans to end bread and electricity subsidies, Shell’s multi-trillion gas discovery in the Mediterranean Sea, and more.
Egypt is looking to wane itself off bread and electricity subsidies + plans to raise fuel prices
The Clap:
Egypt’s Prime Minister yesterday said cabinet is keen to slash spending on bread and electricity subsidization, and hinted at a potential increase in fuel prices by the end of 2025.
Bread subsidies in the crosshairs:
The government wants to minimize spending on bread subsidies to bring the commodity’s selling price closer to equilibrium with the enormous cost of production the state incurs, Madbouly said.
The rationale:
Cabinet is shelling out EGP 125 billion toward bread subsidies for FY 2024-2025 alone, and the state allotments — unchanged since 2018 — “have become a threat to the financial and economic security” of Egypt, Finance Minister Mohamed Maait said earlier this week.
Electricity subsidies are also targeted for a cutdown:
The state is also prepping a strategy to entirely ax spending on electricity over the next four years. The government said in 2022 electricity subsidies will cost the treasury EGP 76 billion by 2027.
A long time coming:
Egypt originally wanted to slash electricity subsidization by 2019, but later extended the time frame to 2022 before charting out a roadmap again to cut spending by 2025.
And fuel prices will likely see an uptick:
Egypt — which increased fuel subsidies in FY 2024-2025 to EGP 154.5 billion — is keen on gradually restoring balance between production expenses and the final price of fuel by the end of 2025, hinting at a potential increase in the commodity’s price tag. “Subsidizing fuel is against the state’s interest,” Maait said, advising instead that the capital allotments be redirected toward social protection, education, and health sector funding.
Why this matters:
Ending energy subsidies is central to unlocking the IMF’s USD 8 billion loan program. The IMF called on the government to control “unaffordable energy subsidies” and fuel prices in compliance with the prices mandated by the automatic fuel pricing committee, and channel spending instead toward social support programs.
Abu Qir’s net profits dip 3.2% in 9M FY 2023-2024
The Clap:
Abu Qir Fertilizers saw its net income and revenues drop in the first nine months of the fiscal year.
Revenues:
The company saw its revenues dip 18% YoY during the nine months ending in March (9M FY 2023-2024) to EGP 14 billion. Abu Qir partly attributes the fall in its top line to a global drop in average fertilizer prices.
Gross profit:
The firm’s gross income is down 35.8% YoY to EGP 6.95 billion in 9M FY 2023-2024.
Operating profit:
The company’s earnings before interest and tax fell 43% YoY to EGP 5.6 billion.
Net profit:
Abu Qir’s net income decreased 3.2% YoY to EGP 12.1 billion during the period.
The Clap:
Palm Hills Developments Company reported a surge in revenue and bottom line growth in the three months ending in March.
Revenues:
The real estate firm saw its revenues surge 76.5% YoY in 1Q 2024 to EGP 6.22 billion.
Gross profit:
Palm Hills more than doubled its earnings before interest and tax to EGP 2.33 billion, seeing a 105.4% YoY rise.
Net profit:
The developer saw its net income rise 296.5% YoY to over EGP 1 billion during the first quarter of the year.
Big plans ahead:
In April, Palm Hills disclosed it is in talks with three banks over an EGP 1.7 billion loan to fund its Palmet Mall project in West Cairo. The developer also said late last month it is partnering with Cleopatra Group for a project on the North Coast that is expected to rake in over EGP 100 billion in revenues.
The Clap:
Oriental Weavers Carpets Company has more than doubled its net profits and saw an almost 17% rise in revenues in the three months ending in March.
Revenues:
The carpet maker saw its top line grow 16.8% YoY in 1Q 2024 to EGP 2.14 billion.
Gross profit:
The company’s earnings before interest and tax rose 62.5% YoY to EGP 307.94 million.
Operating profit:
Operating income before changes in working capital rose 347.4% YoY in the quarter to EGP 56.49 million
Net profit:
The company saw its net income expand 148.1% YoY in the period to EGP 1.37 billion.
The Clap:
Raya Holding Company for Financial Investments more than doubled its income and saw a significant boost to its revenues in the three months ending in March.
Revenues:
The company recorded a 59% YoY growth in revenues to EGP 10.41 billion in 1Q 2024.
Gross profit:
Raya’s earnings before interest and tax climbed 57.9% YoY during the first three months of the year to EGP 2.16 billion.
Operating profit:
The firm more than doubled its operating income to EGP 929.59 million, seeing a 106.3% hike YoY.
Net profit:
Raya upped its bottom line 124.4% YoY during the quarter to EGP 377.88 million.
The Clap:
Arabian Cement Company saw its revenues rise while its bottomline contracted in the three months ending in March.
Revenues:
The company’s net sales rose 13.3% YoY during the first quarter of the year to EGP 1.93 billion.
Gross profit:
Arabian Cement’s gross income totaled 517.37 million during 1Q, recording a 13.9% YoY growth.
Net profit:
The company saw its net income drop 36.8% YoY to EGP 152.64 million in the three months.
The Clap:
Financial services group CI Capital Holding reported 939 million in net profits and saw a sizable jump in revenues during the first quarter of the year.
Revenues:
The company’s revenues are up 79% YoY in the three months ending in March year to almost EGP 2.9 billion.
Finance portfolio:
The firm expanded its finance portfolio at a 4% clip during the quarter, reaching EGP 20.7 billion.
Net profit:
CI Capital saw its net income rise 194% YoY to EGP 939 million during the quarter.
A GCC expansion is in the offing:
The company’s board of directors also approved a corporate expansion into the UAE and Saudi markets. CI will reportedly launch in both countries reportedly within nine months, Asharq Business wrote, citing sources it says are familiar with the plan.
What else is clapping?
Misr Cement (Qena) Company recorded a 62% YoY fall in net profit in 1Q 2024, while its revenues are up 38.5% YoY.
Canal Shipping Agencies reported a 163.2% YoY rise in net profits in 9M FY 2023-2024, while total revenues from continuing operations rose 31.6% YoY to over EGP 77 million.
The Arab Ceramic Co.-Ceramica Remas recorded a 35.5% YoY rise in net income in 1Q 2024, and its revenues are also up 34.6% YoY.
Memphis Pharmaceuticals reported a 374.5% YoY growth in net profit in 9M FY 2023-2024 to EGP 166.3 million, and its revenues rose 50.8% YoY.
Industrial & Engineering Enterprises Co saw its net income dip 8.7% YoY in 1Q 2024 to EGP 747.87 thousand, and its revenues are also down 16.7% YoY to EGP 55.29 million.
Misr Al Gadida for Housing and Development will disburse an EGP 1.34 cash dividend per share for the three months ending in March. Eligibility ends on Monday, the 10th of June.
Shell announced that its Khufu and Mina West gas fields — discovered last week in the North East El-Amriya block in Egypt’s Mediterranean Sea — are projected to hold a total of 2 trillion cubic feet of gas reserves.
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